Heating equipment manufacturer Schmidt-Bretten estimates an increase of 20% in turnover to 9 million euros for this year, because of the growing domestic demand for this type of equipment.
The Danish-owned company Danfoss was alert to the amount of development potential of this business and decided to buy Schmidt-Bretten, which has one of the best positions on its market niche. The company operates with a 15% net profit margin and has 50 employees.
The seller, Mihai Gustiuc, 51, believed that this business had potential to be developed as early as 2000, when the market was sliding.
Mihai Gustiuc had 99.9% in Schmidt-Bretten Technology SRL and Sabrina Rosca, the chief executive held the remaining shares. They will collect about 6 or 7 million euros from this deal, according to estimates provided by market sources.
"I have not decided where to invest the money from the sale of the business yet," Gustiuc says.
Mihai Gustiuc will retain his management position, though, and is to coordinate the expansion of operations on a market thought to be potentially worth hundreds of million of euros over the coming years.
"We set out to enter the markets in Eastern Europe next year: Bulgaria, Moldova, Hungary, Ukraine and develop towards the markets in the West in a few years," Gustiuc says.
The company has not exported heating equipment this year, with the output covering domestic demand. About 80% of Schmidt-Bretten's sales come from contracts secured through public tenders. The company collected about one million euros from the Serbian market last year, so that exports account for 13% of the whole business.
Schmidt-Bretten has a 25% market share, according to its own estimates.
The necessary amount of heating equipment for the entire market is thought to be worth several hundred million euros, due to the severe degradation of the respective infrastructure
The heating systems upgrade programme prepared by the Ministry of Economy and Trade for 2006-2009 will boost the equipment market by some 20% a year, says Mihai Gustiuc.
"Most of our products are made to order, but we plan to resort to standard production for the future to allow us to increase current capacities," Gustiuc adds.
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